Should You Consider Investing in Liberty Latin America (LILA)?

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Steel City Capital, an investment management firm, published its first-quarter 2022 investor letter – a copy of which can be downloaded here. Steel City Capital, LP (the “Partnership”) was essentially flat in the first quarter of 2022, net of fees and expenses. The Partnership declined 1.4% in April, bringing YTD’22 results to a negative 1.5%. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.

In its Q1 2022 investor letter, Steel City Capital mentioned Liberty Latin America Ltd. (NASDAQ:LILA) and explained its insights for the company. Founded in 2017, Liberty Latin America Ltd. (NASDAQ:LILA) is a Denver, Colorado-based telecommunications company with a $1.9 billion market capitalization. Liberty Latin America Ltd. (NASDAQ:LILA) delivered a -25.00% return since the beginning of the year, while its 12-month returns are down by -39.56%. The stock closed at $8.74 per share on May 05, 2022.

Here is what Steel City Capital has to say about Liberty Latin America Ltd. (NASDAQ:LILA) in its Q1 2022 investor letter:

Liberty Latin America (Nasdaq: LILA): LILA is the Rodney Dangerfield of the John Malone empire – it don’t get no respect. The company is a leading telecommunications provider (broadband, television, wireless) operating in over 20 countries across Latin America and the Caribbean. Shares have had a tough go since spinning out from Liberty Global in 2018. At separation, the valuation was rich, but a lot of so-called value investors rushed in anyways because they thought any investment opportunity that checked the boxes of “spin-off” and “John Malone” had to be a money-maker. Wrong. Add to this some pretty ugly financial performance brought about by Hurricane Maria in Puerto Rico and a cumbersome (but not all the complicated) capital structure, and it’s easy to see why shares have performed so poorly. But as you’ve no doubt read in prior quarters’ letters, I’m a big believer in the notion that past performance is not indicative of future results. Today’s market cap is ~$2.1 billion (and shrinking via an ongoing buyback program) and I can very easily underwrite free cash flow north of $400 million in 2024. This reflects a P/FCF multiple of 5.25x / a free cash flow yield of nearly 20%. This is exceptionally cheap for a company with recurring cash flow streams and a very long opportunity to grow via penetration in the years to come.”

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Our calculations show that Liberty Latin America Ltd. (NASDAQ:LILA) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Liberty Latin America Ltd. (NASDAQ:LILA) was in 16 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 14 funds in the previous quarter. Liberty Latin America Ltd. (NASDAQ:LILA) delivered a -17.50% return in the past 3 months.

In February 2022, we also shared another hedge fund’s views on Liberty Latin America Ltd. (NASDAQ:LILA) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.

Disclosure: None. This article is originally published at Insider Monkey.